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Welcome to the Bean Breakdown. Have a great week!
HEADLINES
What You Need To Know
The Federal Reserve held interest rates steady Wednesday but signaled two potential cuts later this year, despite rising uncertainty around tariffs and the economy. The benchmark rate remains at 4.25%–4.5%, where it’s been since December. Fed officials still see a half-point in cuts by the end of 2025, even as inflation risks linger and growth slows. Chair Jerome Powell said the Fed could keep rates elevated if inflation stays sticky but is ready to ease if the labor market weakens. The Fed also noted that economic uncertainty has increased, reflecting a more cautious outlook.
SoftBank will acquire Ampere Computing for $6.5 billion, expanding its push into AI and semiconductor infrastructure. The deal, set to close in the second half of 2025, will make Ampere an independent SoftBank subsidiary based in Santa Clara, California. Ampere designs Arm-based server chips and has 1,000 engineers. SoftBank said the acquisition strengthens its U.S. AI ambitions, including partnerships with OpenAI and President Trump’s $500 billion Stargate initiative. Carlyle Group and Oracle will sell their stakes as part of the deal. Ampere CEO Renee James called it a “fantastic outcome” for the company’s AI-focused roadmap.
Nike warned Thursday that sales will drop by a double-digit percentage this quarter, citing new tariffs, shaky consumer confidence, and a slower-than-expected turnaround. The company expects a decline at the low end of the mid-teens and gross margins to fall 4–5 points as it clears excess inventory. CFO Matt Friend said external pressures like geopolitical tensions, volatile exchange rates, and tax rules are weighing on performance. While Q4 will bear the brunt of these headwinds, Nike expects conditions to gradually improve. Despite the weak outlook, Nike beat expectations in its fiscal third quarter.
Forever 21 has filed for bankruptcy protection for the second time in six years, citing fierce competition from fast-fashion giants Shein and Temu. The retailer plans to shut down all U.S. operations and is liquidating inventory at over 350 stores, though it's still open to bids from potential buyers. In court filings, the company blamed its downfall on rivals using a trade loophole that avoids import duties on low-cost shipments. The filing follows years of struggles post-Covid, surging inflation, and the rise of e-commerce disruptors. President Trump has vowed to end the loophole as part of his trade agenda..
UPCOMING
What You Need To Watch
On Monday, S&P Global will release its Manufacturing PMI data.
On Tuesday, the Conference Board will publish its Consumer Confidence data, providing insight into how Americans feel about the economy.
On Tuesday, February, new home sales data will be released.
On Wednesday, the Atlanta Fed will update its GDPNow model.
On Thursday, the U.S. will release its final Q4 2024 GDP data, offering a complete look at last quarter’s economic performance.
On Friday, February’s PCE inflation report will be released, giving the Fed a key gauge of price pressures across the economy.
TIP
Power Of Holding Through Volatility
One of the most underrated investing skills is simply staying invested during rough patches. Volatility is a normal part of the market, but it often causes investors to panic and sell too early. The best-performing stocks usually have periods of sharp drops, even while delivering strong long-term returns.
If you believe in a company’s fundamentals and long-term story, short-term price swings shouldn’t shake you. In fact, many of the biggest gains happen right after a correction. Selling during volatility can lock in losses while holding steady allows your investment to recover and compound over time.
CHART
Value Investing 101
Source: @bean_wealth
TERM
Deferred Revenue
Deferred revenue is money a company receives upfront for products or services it hasn’t delivered yet. It’s recorded as a liability on the balance sheet until the company fulfills its obligation. For example, if a software company sells a $1,200 annual subscription and collects payment on day one, that $1,200 is considered deferred revenue. Each month, $100 gets recognized as actual revenue as the service is delivered. Investors track deferred revenue to gauge future earnings visibility. A growing deferred revenue balance can signal strong demand and recurring revenue, especially in subscription-based business models.
See you on Wednesday!
Cheers,
Matt Allen
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